Nikkei falls to 1-week low as Japan's recession spooks market

domingo 16 de noviembre de 2014 23:41 GYT
 

* Nikkei falls to lowest since Nov 11
    * Tax hike delay insufficient for ending recession - analyst
    * BOJ's ETF-buying expected when market falls - trader
    * MUFG soars on share buyback plan

    By Ayai Tomisawa
    TOKYO, Nov 17 (Reuters) - Japan's Nikkei share average
tumbled 2.6 percent to a one-week low on Monday morning after
Japan's economy unexpectedly slipped into recession.
    The news prompted investors to take profits after recent
gains stemming from expectations Prime Minister Shinzo Abe will
postpone a planned sales tax hike.
    Japan's economy unexpectedly shrank an annualised 1.6
percent in July-September after a severe contraction the
previous quarter. 
    Traders said the GDP figure made investors risk-averse.
    The Nikkei benchmark closed the morning session down
2.6 percent to 17,037.65. It touched 16,993.89, its lowest level
since Nov. 11.
    "The GDP figure proved that it was foolish that the
government hiked a sales tax (in April) before pulling the
country out of deflation," said Norihiro Fujito, senior
investment strategist at Mitsubishi UFJ Morgan Stanley
Securities. "The government must come up with a measure beyond
delaying the tax hike to cease recession."
    Fujito said the Nikkei's downside would be limited around
16,500 as the GDP figures build the case for the Bank Of Japan
to keep easing policy.
    Even with Monday's fall, the Nikkei is up 8.8 percent since
Oct. 31, after the BOJ announced additional easing and the
Government Pension Investment Fund decided to increase its
allocation to Japanese equities.
     A trader at a foreign brokerage said investors expect the
BOJ to buy exchange-traded funds (ETFs) Monday afternoon. 
    "Anytime the Topix is down in the a.m. session, you would
think there may be some ETF buying in the p.m. session," he
said.
    The BOJ announced on Friday it bought 38 billion yen of
ETFs, part of its beefed-up economic stimulus campaign.
    Retail stocks were weak. Takashimaya Co shed 5.1
percent and Seven & i Holdings Co 2.2 percent.
    Toyota Motor Corp dropped 0.9 percent and Honda
Motor Co 2.5 percent. The dollar quickly pulled back to
115.76 yen after jumping to a seven-year high of 117.06 yen
 on the GDP numbers. 
    Mitsubishi UFJ Financial Group soared 3.0 percent
after announcing plans to buy back 100 billion yen of shares.
    The broader Topix dropped 2.1 percent to 1,371.19,
and the JPX-Nikkei Index 400 declined 2.2 percent to
12,506.79.

 (Editing by Eric Meijer and Richard Borsuk)